William Blair: AMD's Valuation Premium Is Too High, CPU Market Share Growth Set to Become More Difficult
Claire Weston
William Blair analyst Sebastien Naji initiates AMD at Market Perform, arguing the stock is priced at a premium after rallying 146% since April — and the era of easy CPU share gains is ending.
After a 146% rally, is AMD overpriced?
AMD has surged 146% since April, versus 58% for the SOX — the Philadelphia Semiconductor Index that tracks major U.S. chip stocks.
Naji's fair-value estimate is $565 per share; the stock trades at roughly 33× his 2027 earnings forecast.
This means → the market has already priced in the next two years of growth, leaving almost no room for error — the stock needs time to digest this re-rating.
AI supercharged CPU demand — so why are the easy days ending?
The core engine behind AMD's rally is surging CPU demand in AI workloads, especially AI-agent use cases.
But Arm, Qualcomm, Nvidia, and legacy rival Intel are all accelerating into the server CPU market simultaneously.
In plain terms = AMD used to gain share simply because Intel stumbled. Now it faces enemies on four fronts, and every percentage point must be fought for.
Can Intel stage a comeback? How deep is Nvidia's moat?
Naji expects Intel to regain server CPU competitiveness within one to two years; the Coral Rapids architecture due in 2028 could be the turning point.
On the GPU side, Nvidia's software ecosystem and broader product matrix form a near-insurmountable moat — AMD remains under pressure.
This means → AMD is fighting on two fronts — an Intel counterattack in CPUs and an immovable Nvidia in GPUs. The growth story is getting harder on both sides at once.
Is there still a medium-term case?
Naji does not deny AMD's growth potential: he sees server CPU share exceeding 50% within a three-to-five-year horizon.
But he warns that if growth deceleration becomes visible heading into 2027, the stock could face a re-rating — "just as Nvidia and Broadcom experienced before."
This reflects the analyst's core call: the growth itself is real — the problem is that the price has already bought it all.
Content is for reference only, not financial advice.